United Nations

GA/AB/3692
21 October 2005

Member States Tout UN Reform, but Fail to Address Perennial Problem of Delayed Budget Contributions, Fifth Committee Told

Also Takes up Report of International Civil Service Commission

NEW YORK, 20 October (UN Headquarters) -- With "reform" touted as this year's slogan and a series of last month's Summit decisions seeking to equip the United Nations with the means to respond more effectively to the needs and challenges of today and tomorrow, there had thus far been no progress concerning payment of Member States' contributions to the Organization's budget, the Fifth Committee (Administrative and Budgetary) was told this morning, as it considered the means of improving the financial situation of the United Nations. 

The representative of the United Kingdom, who spoke on behalf of the European Union and associated States, said "we demand that the United Nations become more efficient", yet by mid-October the Organization was still waiting for one third of the regular budget to be paid and 90 per cent of that was owed by just three Member States -- United States, Brazil, Argentina.  There was also "a more or less permanent" debt of $2 billion from Member States to the Organization's peacekeeping budgets.  All States should take their obligations to the Organization as seriously as they expected the Secretariat to take its obligations and take steps to change payment schedules for the regular budget where those were endangering efficient functioning.

Similar sentiment was expressed by the representative of South Africa, who recalled that great emphasis had been placed recently on the functioning of the Secretariat and measures to enhance accountability of staff.  Unfortunately, less emphasis had been placed on Member States' responsibility towards the Organization.  The momentum of the 2005 World Summit would only be maintained if States made a more concerted effort to act on their Charter obligations and pay their contributions in full, on time and without condition. 

Also urging all Member States "to find within themselves" the will to pay their assessments in full, on time and without conditions, Singapore's representative stressed that the issue of late or non-payment of dues was just one side of the coin.  The other, ugly side, was political in nature.  Singapore believed that, in the majority of cases, there was more than enough money to pay for the budgets of the United Nations, provided there was political will to do so. 

Cuba's representative noted substantial growth in the contributions of many countries, most of them developing, and the separation from capacity to pay as a key element of the assessment scale.  Due to the increase in contributions because of the reduction in the maximum rate of assessment, or ceiling, from 25 to 22 per cent -- the main distortion in the current scale of assessment methodology -- an important group of developing nations had difficulties paying those contributions. 

Japan's representative expressed concern that the Organization's budget might increase by almost $1 billion in just two years, and not enough attention was being paid to the abrupt and sharp increase in the amounts of assessments in recent years.  It was necessary to think seriously about striking a balance between the "affordability" for Member States and the needs of the Organization.

The representative of Australia, also speaking on behalf of Canada and New Zealand, expressed disappointment over the fact that several permanent members of the Security Council -- a privileged position, particularly in regard to the peacekeeping missions -- were among those with the largest arrears for peacekeeping missions. 

Several speakers, including the representative of Jamaica, who spoke on behalf of the Group of 77 and China, also expressed concern at the high level of the Organization's debt to Member States.  According to the projections presented last week by the United Nations Controller, amounts owed to Member States for troops and contingent-owned equipment would come to $779 million at the end of the year, due to a delay in the deployment of troops in Sudan, delays in the signing of memoranda of understanding with troop providers, deployment of additional troops and police to Haiti, the Democratic Republic of the Congo and Côte d'Ivoire and a shortage of cash in some missions.

In that connection, Jordan's representative said that the delegations had heard repeatedly the reasons behind the delays, but it was time to take a serious look at the situation, particularly as reform and accountability seemed to be the catchwords of the session.

Also today, the Chairman of the International Civil Service Commission (ICSC), Mohsen Bel Hadj Amor, introduced that body's report, which contains the latest recommendations on the Organization's pay and benefits system, contractual arrangements and conditions of service of international staff.  As the Committee proceeded to discuss that matter, President of the Federation of International Civil Servants' Association (FICSA), Robert Weissel, also addressed the Committee. 

Also taking the floor today were the representatives of India, Malaysia, Argentina (on behalf of the Rio Group), Lao People's Democratic Republic (on behalf of ASEAN), Saudi Arabia, Russian Federation, Bangladesh, China, Kuwait, Republic of Korea, Viet Nam, Pakistan, Nigeria and the United States. 

United Nations Controller, Warren Sach, provided an update on payments by Member States to the United Nations budgets.  Other documents before the Committee were introduced by Director of the Secretariat of the United Nations System Chief Executives Board for Coordination, Qasi Shaukat Fareed; Director, ad interim, of the Programme Planning and Budget Division, Sharon van Buerle; and Acting Chairman of the Advisory Committee on Administrative and Budgetary Questions (ACABQ), Rajat Saha.

The Committee will continue its debate on the United Nations common system at 10 a.m. tomorrow, 21 October.

Background

The Fifth Committee (Administrative and Budgetary) was expected to take up several reports related to the Organization's common system this morning and begin its debate on the financial situation of the United Nations, which was presented to it last Thursday by the United Nations Controller (see Press Release GA/AB/3688 of 13 October).

Before the Committee was the report of the International Civil Service Commission (ICSC) for 2005 (document A/60/30), which contains its latest recommendations on the Organization's pay and benefits system, contractual arrangements and conditions of service of international staff.

As part of its ongoing review of the pay and benefits system, the Commission continued its pilot study of new approaches to the way staff are paid in the United Nations common system, striving to link job requirements with competencies, development and staff performance.  If implemented, such initiatives as broadbanding and performance pay would be the most significant departure from the traditional system of remuneration since the United Nations was established.  [Broadbanding is defined as a strategy for salary structures that consolidate a large number of pay grades into a few "broad bands".]

Having reviewed the current status of the study that it initiated on 1 July 2004 in four volunteer organizations -- the International Fund for Agricultural Development (IFAD), Joint United Nations Programme on HIV/AIDS (UNAIDS), United Nations Development Programme (UNDP) and the World Food Programme (WFP) -- the Commission was encouraged by the progress made thus far.  It was, however, concerned about the direction that some of the test modalities were taking and reminded the volunteer organizations that any deviation from those modalities would require the Commission's prior approval.

The report further indicates that salary levels for the federal civil service of the United States of America in Washington, D.C. -- the comparator, on which United Nations salaries are based -- increased by 2.49 per cent this year.  In accordance with approved procedures and past practices, the Commission recommends an upward adjustment of the current base/floor salary scale for staff in the Professional and higher categories by 2.49 per cent, effective from 1 January 2006.  That would be implemented "through the standard method of consolidating post adjustment multiplier points on a no-loss/no-gain basis".

The Commission also continued its efforts to modernize and simplify allowances payable in the system.  In particular, the Commission has prepared a new scheme for making payments under education grant, mobility and hardship allowances, which is presented in annex II to the report.  It also decided to maintain the distinction in remuneration between staff with and without primary dependants, as well as current ratios between the single and dependency salary rates.  That decision was linked to the practices of Member States that maintain such a differentiation.  Higher net salaries for staff with dependants reflect additional costs involved, as opposed to staff without dependants.

The ICSC also decided to increase the level of hazard pay to internationally recruited staff from $1,000 to $1,300, effective 1 January 2006, leaving the level of hazard pay for local staff unchanged.

On the Organization's contractual arrangements, the Commission presents to the Assembly a framework of guidelines for introduction of a new system of continuing, fixed-term and temporary appointments, which is contained in annex IV to the report.

Under the new system, continuing appointments would cover such existing arrangements as "permanent, indefinite, continuing, career, long-term and service" contracts.  This category would be subject to the continuing needs of the organizations and extend to staff performing functions that are core to the mandate of each body.  Periodic reviews may be performed to consider continuation of such contracts, based on such criteria as organizational interests, fully meeting performance expectations and upholding standards of conduct.  Staff in this category would have to serve a probationary period of between one and two years.  Alternatively, staff who perform and fully meet expectations under a fixed-term contract for no less than one year would be considered to have met probationary requirements for a continuing contract.

Fixed-term appointments would be of at least one year's duration and for a period of up to five years, covering staff who perform functions that are part of the organization's regular and continuing activities.

Temporary appointments would accommodate defined, short-term needs of the Organization of less than one year, as well as short-term service with special missions, projects of limited duration and special humanitarian operations.  These contracts would cover such existing appointments as short-term, temporary, term-limited, fixed-term short duration and monthly short-term appointments.  Consultancies, service agreements and other contractual arrangements that are not executed as staff contracts would be excluded from this category.

In his statement on the administrative and financial implications of the decisions and recommendations of the ICSC (document A/60/421), the Secretary-General informs the Assembly that additional requirements in connection with recommendations having an effect on the budget for 2006-2007 have been estimated to be in the order of $5.67 million, net of staff assessment.  These requirements will be reflected in the recosting of the proposed programme budget estimates prior to determination of the appropriation to be adopted by the General Assembly.

Financial implications of the decision to adjust the base/floor salary scale have been estimated at $975,300 for 2006-2007.  The amount would include an increase of $484,400 in the level of mobility and hardship allowance, and an increase of $490,900 in the level of separation payments.

Also addressed in the report is an adjustment of staff assessment rates.  Over the past few years incomes of the Tax Equalization Fund have consistently exceeded the requirements for reimbursements to staff members subject to United States income taxes.  At 31 December 2004, a cumulative surplus of the Tax Equalization Fund had reached $87.8 million.  In that connection, the Commission proposed a new staff assessment scale for the Professional and higher categories of staff reduced by 20 per cent with effect from 1 January 2006.

The proposed adjustment would lower the gross salaries, but it would have no effect on net salaries.  It is estimated that application of the new staff assessment rates would result in a reduction of the estimated requirements for the biennium 2006-2007 in the amount of some $48.89 million under staff assessment.  The incomes under income from staff assessment would be reduced in the same amount, resulting in a zero net effect for the 2006-2007 budget.

Based on the 2002 staff statistics, the total annual financial implications of the decision to increase hazard pay have been estimated by the Commission at about $1.44 million.  However, with recent expansion in the number and scope of special political missions, particularly in high-risk areas, the Secretariat utilized its most recent statistical information on the number of staff deployed in the field in the context of special political missions.  Based on those statistics, the annual financial implication for the budget has been estimated at $2.35 million, for a total potential impact for the biennium in the amount of some $4.69 million.

While not commenting on the recommendations themselves or on their underlying methodology, the Advisory Committee on Administrative and Budgetary Questions (ACABQ), in a related report (document A/60/7/Add.3) states that it has no objection to the Secretary-General's intention to reflect additional requirements associated with the ICSC recommendations in the recosting of the proposed budget in December.

It further comments on the use of the term "no-loss/no-gain" in connection with proposed 2.49 per cent upward adjustment of the current base/floor salary scale for staff in the Professional and higher categories.  The Advisory Committee states that further explanation is required in that regard, which would clearly demonstrate whether or not an upward adjustment of the base/floor salary scale, when implemented through the method of consolidating post adjustment multiplier points, would actually come at no additional cost to the United Nations.  The ACABQ questions cost neutrality beyond the date of implementation, in particular with regard to the management of the post adjustment system.

According to the report, the explanation should be provided to the Fifth Committee at its current session and should be included in all future statements on ICSC recommendations, as appropriate.  If necessary, the term "no-loss/no-gain" should be replaced with another term that could better describe the consolidation of post adjustment multiplier points into base/floor salary scales.

The Advisory Committee notes from the Secretary-General's statement that the recommendation of ICSC on adjustment of staff assessment rates will have no impact on net resource requirements under the proposed programme budget for the biennium 2006-2007.  The reduction of $48.89 million under section 35, Staff assessment, which will be offset by a corresponding reduction under Income section 1, Income from staff assessment, will be reflected in the recosting of the proposed programme budget for the biennium 2006-2007.

In a note to the General Assembly (document A/60/209), the Secretary-General said that the United Nations System Chief Executives Board for Coordination (CEB) High-Level Committee on Management in April 2005 endorsed the re-designation of the Senior Management Service as the Senior Management Network.  The re-designation was in response to General Assembly resolution 59/268, which asked the Secretary-General, in his capacity as CEB Chairman, to re-designate the Senior Management Service to reflect its character as a set of collaborative efforts to enhance the managerial capacity and performance of senior staff by respective executive heads and to report on the scope and content of such efforts to the sixtieth General Assembly.

The note states that the new designation reflects the main purpose of the initiative in creating a managerial network across the system and is in line with existing CEB terminology.  The name change also should allay any concerns about the possible creation of a separate category of staff or new positions.  The Network will bring together senior managers from throughout the system and executive heads will be responsible for designating staff for participation in the Network and for guiding its direction.  The Network does not involve any change in the conditions of service, compensation or contractual arrangements.

The Secretary-General's note also says that the High-Level Committee on Management expressed its support for the creation of a system-wide leadership programme that is being designed to underpin the Network.  The programme -- which should be launched in 2006 for groups of senior managers from across the common system -- is meant to build managerial and leadership capacity, strengthen partnerships in the system, and increase the ability of organizations to work effectively together at all levels, including the field.

Statements

ELIZABETH GALVEZ (United Kingdom), speaking on behalf of the European Union and associated States, said that reform was this year's slogan.  The Summit had adopted a series of decisions to equip the United Nations with the means to respond more effectively to the needs and challenges of today and tomorrow.  Yet, one area where there had been no movement was the timely payment in full of contributions to the Organization.  "We demand that the United Nations become more efficient, yet by mid-October, they are still waiting for one third of the regular budget to be paid, 90 per cent of that owed by just 3 Member States", she said.  With several large-scale peacekeeping missions mandated, there was a more or less permanent debt of $2 billion from Member States.  The Union, therefore, asked all Member States to take their obligations to the Organization as seriously as they expected the Secretariat to take its obligations, and to take steps to change payment schedules for the regular budget where those were endangering efficient functioning of the Organization.

Because of the lack of financial stability and predictability, the Organization had been unable to reimburse some troop-contributors promptly, she continued.  The largest troop-contributing countries were developing countries, which had a legitimate expectation to be reimbursed quickly and fully.  Until the Fifth Committee was able to have a substantive debate on late payments, troop-contributing countries would continue to face delayed reimbursements.  However, where delays in troop-contributing countries' reimbursements were caused by delays in signing Memorandums of Understanding, she urged that the issue be addressed by those responsible as a matter of urgency.  The Union did not expect to be presented with revised peacekeeping budgets simply because missions were running low on cash, as had been the case earlier this year with two missions.  Also, the difficult cash position of the United Nations Organization Mission in the Democratic Republic of the Congo (MONUC) would not be helped by the very late issuance of that Mission's budget.

Meanwhile, the Secretariat repeatedly requested -- and had done so again this session -- the retention of funds in closed peacekeeping accounts that had been owed to Member States for many years now, she added.  She was relieved that the financial situation of the Tribunals had eased, compared to previous years.  Nevertheless, the projection of a cash deficit at the end of the year for the Rwanda Tribunal was worrying.  It was also disappointing that a few Member States had for more than 10 years paid nothing at all towards the Tribunals' costs.  She urged them to demonstrate their commitment both to international justice and to the Charter of the United Nations by making payments soon.

NORMA TAYLOR ROBERTS (Jamaica), speaking on behalf of the "Group of 77" developing countries and China, said that successful implementation of the programmes and activities by the United Nations depended, to a large extent, on the adequacy of resources made available my Member States.  In that regard, this being the budget year, and bearing in mind proposals from the High-Level Meeting of the Assembly, the Group stressed the necessity of making available sufficient and adequate resources to the Organization.

There had hardly been any movement towards an improved financial situation, she continued.  For the period under review, two more States had paid in full their regular budget assessments, compared to last year.  While that was an encouraging sign, it had had no impact at all on the resources of the Organization.  The surge in peacekeeping had resulted in a substantial increase in the peacekeeping budget, with the current level of assessments reaching a high of nearly $6 billion.  New and expanded peacekeeping operations had, understandably, continued to put additional strain on Member States.  The Group expressed its concern at the continuing high level of amounts payable to troop-contributing countries, particularly for contingent-owned equipment.

Turning to the Tribunals, she noted some improvement in their cash position, but said that the Group of 77 remained convinced that the Tribunals required predictable and adequate financial resources to carry out their mandates effectively.  The Group recognized the need to ensure financial stability of the United Nations in order for it to function effectively and be able to fully implement all its mandates and activities.

FRANCES LISSION (Australia), speaking also on behalf of Canada and New Zealand, said she was pleased by the signs of improvement in the financial forecast.  But, the good news should not obscure the fact that unpaid assessments had increased for the regular budget, tribunals and the Capital Master Plan.

She said it was encouraging that the number of Member States paying their regular budget assessments in full was 17 more this time than last year.  It did leave 65 Member States owing a total of $739 million, of which more than 90 per cent was owed by three Member States.  The payment of those assessments would do much to stabilize the financial situation of the United Nations.

She said the level of outstanding peacekeeping assessments was unacceptably high, at $2.1 billion, even though it had declined this year.  She was disappointed to see several permanent members of the Security Council, a privileged position particularly in regard to the peacekeeping missions, among the list of those with the largest unpaid assessments for peacekeeping missions.  She said she would welcome suggestions from the Secretariat on how it planned to resolve the financial problems of the peacekeeping missions to ensure their financial security.

S.K. BWISWMUTHIARY (India) aligned himself with the statement made by Jamaica on behalf of the Group of 77 and China, and said the obligation to pay the expenses of the Organization in full and on time and without conditions was a fundamental requirement accepted by all Member States and reflected in innumerable General Assembly resolutions.  He noted some positive developments in the financial situation of the United Nations in 2005, but also noted the concentration of outstanding dues among two or three Member States and the fact that one Member State alone accounted for 80 per cent of the total dues outstanding regarding the regular budget.

He said the fact that the unpaid assessments for peacekeeping was consistently more than $2 billion was a matter of concern.  Assembly restrictions that prevented borrowing from one active mission to finance the operations of another could have a paralysing effect on the operations of a mission.  The United Nations owed more than $100 million to Member States for troop and equipment costs from several closed peacekeeping missions that were in net cash deficit.  He was concerned that the amount owed to Member States for troops and contingent-owned equipment at the end of the year would have grown to $779 million, from $628 million at the end of 2004.

HASSAN MALEK (Malaysia) associated himself with the position of the Group of 77 and said that he was encouraged to note that there had been some sign of improvement in the financial situation of the Organization in 2005, with a slightly better cash position, as compared to the previous year.  However, problems remained.  More than $400 million was expected to be paid to the United Nations during the final quarter of this year.  He earnestly hoped that Member States concerned would be able to meet the expectations in due time, to avoid placing the United Nations in the red at the end of the year.

It was also vital to provide adequate resources to peacekeeping missions in ensuring their successful implementation, he said.  Like in the previous year, his delegation was also concerned with the continuous practice of the Tribunals and several ongoing peacekeeping operations, which had had to resort to borrowing funds from the accounts of closed missions.  He hoped that active missions would not have to resort to cross-borrowing again.

In relation to the Tribunals, he noted the progress achieved in resolving the outstanding amount owed to those bodies.  He hoped that the positive trend would continue in the future.  On the Capital Master Plan, he hoped that all aspects concerning its implementation could be finalized as soon as possible, given the fact that further delays in the design phase would escalate the costs of the project.  He looked forward to the issuance of a detailed report on that project in early November.

He was confident that Member States would continue to make collective efforts and renew their commitments to enable the United Nations to be better organized, provided with the necessary resources and fully equipped to fulfil its mandate.  Unless Member States met their obligations to pay their assessments in full and on time, it would be difficult for the Organization to carry out its functions and the reform process in the expected efficient and effective manner.  That was the only viable solution to the secure financial health of the United Nations.  At the same time, he was mindful of the difficulties faced by some States in settling their arrears.  Nevertheless, he hoped that Member States, in particular the major contributors, would honour their obligations and settle their arrears without any conditions attached.

ALEJANDRO TORRES LEPORI (Argentina), associated himself with the Group of 77 and China and, speaking on behalf of the Rio Group, said that he was glad to note that the cash position of the United Nations was comparatively better than in 2004.  Nevertheless, he remained concerned that the overall situation continued to be fragile and that cross-borrowing might be needed to enable the functioning of peacekeeping operations and international tribunals.  The countries of the Group saw the financial health of the United Nations as essential in allowing it to fully accomplish its mandate.  On that understanding, they strived to fulfil their obligations, fully and on time.  Some delays could be explained merely by domestic budget difficulties and by the need to urgently address high-priority social demands, including the eradication of poverty.  In some other cases, the members of the Group had fulfilled their respective obligations on time, but not without sacrifices.

He informed the Committee that some countries of the region had paid and would be paying considerable amounts of money to the budgets of the Organization.  That demonstrated their commitment to the United Nations.  As for the reimbursements for troops and contingent-owned equipment, he was pleased to say that, in some cases, there had been significant improvements regarding the speed of their processing.  However, he was still worried about the payments that were behind, affecting such missions as the United Nations Interim Administration Mission in Kosovo (UNMIK), the United Nations Peacekeeping Force in Cyprus (UNFICYP), MONUC and the United Nations Mission for the Referendum in Western Sahara (MINURSO).  He took note with concern of the present situation in MONUC, which made December payments to troop contributors unlikely.

He added that the Group appreciated that the cash position of the international tribunals had experienced a slight improvement.  With the Capital Master Plan, he was willing to make specific comments, once the delegations had analysed the outcome of the review commissioned by the Under-Secretary-General for Management, which was due in November.

ALOUNKEO KITTKHOUN (Lao People's Democratic Republic) spoke on behalf of the Association of South-East Asian Nations (ASEAN), and supported the statement of the representative of Jamaica on behalf of the Group of 77 and China.  He said he was pleased that the financial situation of the United Nations had improved, but was concerned that any serious delay in the last quarter payments would see the year end "in the red."  The ASEAN was concerned that the Organization would have greater difficulty carrying out its activities mandated by Member States, with a total unpaid assessment of nearly $3 billion.

He was also concerned by the financing difficulties facing the peacekeeping missions, because that could lead to a delay in reimbursements to countries that provided troops and equipment to various peacekeeping operations.  He emphasized the collective responsibility of all Member States to finance the United Nations and urged all Member States to honour their obligations to provide the Organization with adequate resources in a timely manner.

DUMISANI S. KUMALO (South Africa) said that the United Nations had not yet met its goals regarding the financial well-being of the Organization.  Great emphasis had been placed recently on the functioning of the Secretariat and measures to enhance the accountability of staff to the Organization and to Member States, he said.  Unfortunately, less emphasis had been placed on Member States' responsibility towards the Organization.  It would be negligent not to acknowledge that Member States had an equal responsibility to ensure that the Organization received the resources that it required to implement the wide range of tasks entrusted to it.  The momentum of the 2005 World Summit would only be maintained if States made a more concerted effort to act on their Charter obligations and pay their contributions in full, on time and without condition.

South Africa welcomed the progress made towards reducing the outstanding amounts for the two international tribunals, he said.  Both tribunals were nearing the end of their mandates and his delegation was alarmed by projections that the Rwanda Tribunal may once again end the year in deficit.  He trusted that Member States would muster the political will to ensure that the international community's condemnations of the abuses suffered by the people of Rwanda in 1994 amounted to more than just words.

Continuing, he urged the Organization to meet its responsibilities and reimburse those Member States that had provided troops and equipment to United Nations peacekeeping operations.  The bulk of outstanding amounts were owed to countries in Africa and other developing countries, he said, and continued efforts to support peacekeeping would be greatly enhanced if the Organization met its obligation to reimburse them in a timely manner.  To that end, his delegation was concerned to note that the United Nations owed South Africa more than $36 million and trusted that the situation would be urgently rectified.

RAZIFF ALJUNIED (Singapore) supported the statement made by the Lao People's Democratic Republic on behalf of ASEAN and Jamaica on behalf of the Group of 77 and China.  He said the lack of predictability in payments of assessed contributions by Member States to the United Nations regular budget, peacekeeping operations, the United Nations tribunals and the Capital Master Plan continued, despite the persistent need for the Organization to have a strong and dependable financial base to carry out its work.

He was concerned that, while 126 countries had paid their regular budget assessment in full by 7 October 2005, a total of $739 million remained outstanding.  It was significant that more than 90 per cent was owed by three Member States and more than 80 per cent by one Member State alone.  There was no excuse for a State, even more for a State that had been doing well economically, not to fulfil its obligations as mandated in the United Nations Charter.  The need for a country to pay its United Nations dues in full, on time and without conditions was clearly linked to the notion of accountability that was being debated and applied within the United Nations.

He also was aware that the issue of late or non-payment of United Nations dues was just one side of the coin.  The other ugly side was not financial, but political in nature.  Singapore believed that, in the majority of cases, there was more than enough money to pay for the regular and peacekeeping budgets of the United Nations, provided there was the political will to do so.  But there seemed to be an absence of such political will.  He urged all Member States to find within themselves the political will to pay their assessed contributions in full, on time and without condition.

KHALID ELSAHLI (Saudi Arabia) said that his Government believed that a sound financial situation for the United Nations would allow it to fully implement its mandate.  For that reason, it had fully paid its assessments for the regular budget of the Organization and for the International Tribunals.  He also reaffirmed his Government's commitment to pay its assessments for the peacekeeping missions to ensure that they functioned effectively. 

He welcomed the fact that the financial situation of the United Nations had slightly improved, but noted delayed payments to its budget.  If Member States continued to mandate additional activities, they would have to meet their responsibilities by paying their assessments in full and on time, both for the regular and peacekeeping budgets of the Organization.

VLADIMIR IOSIFOV (Russian Federation) said that, according to the information provided by the Controller, all United Nations activities and budgets were running with a cash deficit.  Certainly, the situation had become more stable and predictable, but the problem was far from being finally solved.  Failure by Member States to fulfil their financial obligations to the Organization was discordant with the need to increase expenditures in a number of areas, primarily due to an unprecedented growth in peacekeeping, whose budget now exceeded $5 billion.  A combination of those two factors could seriously undermine United Nations efforts in maintaining international peace and security.  A negative scenario could only be avoided through stricter cost-saving measures, stronger financial discipline and prompt settlement of arrears, including those to peacekeeping budgets. 

His Government had been fulfilling its obligations to the United Nations accurately and on time, he continued.  Its position of principle remained unchanged:  Member States must fulfil their Charter obligations to pay their contributions in full, without conditions and without making the payment of contributions an instrument of political pressure.  Only a strong and predictable financial base could help the Organization implement the important and challenging tasks assigned to it by Member States.

Stable financing was a prerequisite of success for any activities within the United Nations framework, he added, including the efforts to reform the Organization that had gained momentum after the Summit this September.  He called on all States that had not yet done so to make efforts to repay their arrears to the United Nations, thus strengthening its capacity to respond to emerging global challenges and threats, implement approved programmes and adapt to the needs of the global community.

MUHAMMAD A. MUHITH (Bangladesh) said he associated himself with the statement of Jamaica made on behalf of the Group of 77 and China.  He said the United Nations must have a strong, sound and dependable financial base to cope with the ever-increasing challenging tasks entrusted to it by all Member States.  He said he was concerned about the fragility of the Organization's financial situation, as the Organization is now heavily dependent on the anticipated payment of unpaid assessments in the final quarter.  If last year's pattern of payment was replicated, we would end the year "in the red".

He said the cases of Member States that are temporarily unable to fulfil their financial obligations for reasons beyond their control should be considered sympathetically through the established procedures.  But, Member States should pay what they are supposed to in full, on time and without conditions, in keeping with their Charter obligations.  On the issue of the peacekeeping budgets, he said the level of debt owed to Member States at year's end would be around $779 million for troops and contingent-owned equipment.  The situation could further deteriorate, if cross-borrowing from the peacekeeping budget was needed.  He said that unhealthy practice, in the past, led to inordinate delays in reimbursements to the countries providing the troops and equipment.

XUDONG SUN (China), aligning himself with the Group of 77, noted that, while 126 Member States had paid their assessed contributions, there was still $739 million in outstanding contributions to the regular United Nations budget, $73 million in unpaid tribunal assessments and $2.164 billion in unpaid peacekeeping assessments.  Statistics showed that a majority of Member States paid their assessed contributions in full and on time, but there were others who failed to scrupulously fulfil their financial obligations.  If Member States did not fulfil those obligations in earnest, it had the effect of reducing the United Nations budget to a mere piece of paper, with no binding effect.

He said that despite being a developing country with a relatively low capacity to pay, his country was keenly aware of its responsibility as a major power; China paid its assessed contribution to the regular budget of $36.5 million for the year 2005, $6.5 million in the assessment for two International Tribunals for the former Yugoslavia and Rwanda, and about $116 million in peacekeeping assessments.  In so doing, China had made a tangible contribution towards a solid financial basis for the United Nations, which was essential for the Organization to carry out its mandate, and he called upon all Member States to genuinely fulfil their financial obligations.

NASER M. AL-HAYEN (Kuwait) said he endorsed the statement made by the representative of Jamaica on behalf of the Group of 77 and China, as Kuwait attached great importance to the financial stability of the United Nations system.

He said the financial difficulties experienced by the Organization, at times, was the result of non-compliance by Member States with their obligations to pay their assessed contributions in full and on time.  He said Member States' aspiration for UN reform and development could not occur, as long as the Organization's expenditures were not settled according to the Charter's provisions.  He stressed the importance of cooperation between Member States and the Secretariat to achieve that purpose.  A strategic vision was needed to correct the defects in the Organization's performance.

Kuwait would continue to assume its financial obligations in full and on time.  He said the political will of Member States to pay their financial obligations in full and on time should be their top priority so that the Organization could continue to fulfil its mandates.

ORLANDO REQUEIJO GUAL (Cuba) noted the negative impact brought about by the main changes on the scale of assessment, including the substantial growth in the contributions of many countries, most of them developing, and the separation from capacity to pay as a key element of the assessment scale.  Due to the increase in contributions because of the reduction in the ceiling assessment -- the main distortion in the current scale of assessment methodology -- an important group of developing nations have had difficulties paying their contributions.  They had made a huge effort to do so and that effort demonstrated their political will to abide by the United Nations Charter, despite the increasingly harsh economic situations in their countries due to inequalities in the world order, and increasing inequalities in the international relations system.

Continuing, he noted that the debts of the Organization's main contributor came to about 68 per cent of total debts to the regular budget as of 31 December 2004, and currently amounted to 82 per cent of contributions in arrears to that budget.  It was unacceptable that that State, after pressuring the Organization to reduce its assessment scale, did not honour its financial dues.  He hoped that situation was not due to new intimidation or blackmail by that State, or linked to steps its Congress wished to take to withhold funds to pay its debts to the Organization if its reform demands were not approved.  The General Assembly should supervise that State's payments closely and adjust the ceiling upwards to determine the scale of assessments for 2007-2009.

He added that his country was up to date in its regular and tribunal budget payments and had substantially reduced its debt to the peacekeeping budget -- income achieved despite the strengthening of the 45-year-old economic blockade imposed by the United States on his country.

SHIN KAK-SOO (Republic of Korea) said he hoped that the reform process would put the United Nations on a more stable footing financially by making it more efficient.  He also understood that reform became more difficult when finances were uncertain.  The primary responsibility for the financial health of the United Nations remained with the Member States.  There was only so much that the Department of Management could do in terms of coping with the financial challenges.

On the issue of funding the Tribunals, his country had always paid its assessments for the two Tribunals on time and in full.  But, he was concerned with their high costs and welcomed the recruitment freeze that was put in place this year.  He was concerned to learn that 112 Member States had assessed contributions outstanding at the time of the Secretary-General's report, while 10 Member States had made no contribution at all since the Tribunals began.

He said the growth of debt to Member States was another area of concern.  The increasing contribution of troops to the growing level of peacekeeping operations could only be sustained if States were reimbursed for the costs.  With regard to his country's contribution to peacekeeping, he said a sudden increase in its share of the peacekeeping budget and the cost of its assessment had made payment of its peacekeeping dues difficult, after the nation had always paid its share of the regular budget on time and in full.  He said his Government was now working to develop a payment plan that would allow it to meet its obligations.

MOHAMMAD TAL (Jordan) said full, timely and accurate information on the financial situation of the Organization must be provided to Member States to assist them in making the right decisions on management and administration of the Organization.  He associated himself with the position of the Group of 77 and said that fulfilment by Member States of their financial obligations for the United Nations was the only way to allow the Organization to implement its mandate effectively.  The availability of financial resources was a prerequisite for success.  While the practice of presenting oral presentations on the United Nations financial situation fell short of what he considered an effective and participatory mechanism to assess and subsequently ensure the financial health of the United Nations, his delegation had several comments to make.

He remained concerned about the level of unpaid assessments by some Member States, particularly the main contributor, he said.  It was unacceptable that, as of 7 October, some 40 per cent of assessments remained outstanding.  He called on all Member States to fulfil their obligations to the United Nations, as the final financial outcome of the year depended on the next few months.  As one of the main troop contributors, Jordan was certainly interested in the financial health of peacekeeping operations.  As in the case with the regular budget, it was difficult to understand how effective implementation of peacekeeping mandates could be carried out when just about 50 per cent of all assessments issued as at 7 October remained outstanding.  That matter should not be taken lightly.  It was simply unacceptable to call for efficient, transparent management of peacekeeping resources, when those resources were stretched thin and operations were running under tight financial conditions. 

It was also important to expedite reimbursement to troop-contributing countries, he said.  Delegations had been told repeatedly the reasons for the delays, but it was time to take a serious look at the situation, particularly as reform and accountability seemed to be the catchwords of the session.

NGUYEN DINH HAI (Viet Nam) associated himself with the position of the Group of 77 and ASEAN, and noted with pleasure that some signs of improvement had been reported to the Committee.  Some concerns remained, however, and the financial situation of the Organization remained fragile.  The financial health of the Organization depended on both the management of resources and contributions by Member States.  Therefore, in order to improve it, it was important to deal with those two issues.

He said that he was pleased that a comprehensive reform agenda had been put forward, in which reform of the planning and budgeting process was one of the most important components.  He called on the Secretariat to expedite the implementation of resolution 57/278, requesting the Secretary-General and executive heads of funds and programmes to examine governance structures, principles and accountability throughout the system to ensure proper financial management and accountability.  Reform would be a long process, but he hoped the Organization would be able to better implement an increasing number of programmes and activities in a more efficient and cost-effective manner.

On the issue of contributions, he said that Member States must honour their financial obligations in accordance with the Charter.  At the same time, he also recognized that some special circumstances could prevent Member States, particularly developing countries, from making their contributions in full and on time.  Any measures to encourage payment of arrears should be in line with General Assembly resolution 57/4.  In that spirit, multi-year payment plans should remain voluntary and should not be used as a condition for granting exemptions under Article 19 of the Charter.

HITOSHI KOZAKI (Japan) said that the report on the financial situation tended to place emphasis on which countries had paid their assessments and which had not, but not enough attention was being paid to the abrupt and sharp increase in the amounts of assessments in recent years.  Revised estimates of peacekeeping operations for 2005-2006 amounted to some $5 billion, whereas the budget approved for 2004-2005 in June 2004 was about $2.8 billion.  An informal briefing to the Committee two weeks ago seemed to suggest that the regular budget for 2006-2007 could reach an unprecedented level of $4 billion.  In that connection, he recalled that, in the fall of 2003, delegations had been expressing concern that the budget might exceed $3 billion.  He could not but express surprise and concern that now the Organization was faced with a budget that might increase by almost $1 billion in just two years.

He added that the Member States should not forget that larger context when talking about the financial situation of the United Nations.  Periodic reports from the Secretariat on the financial situation provided the membership with a snapshot view of where the Secretariat found itself at a given moment.  At the same time, it was necessary to think about the issues that underlined a given financial situation.  As his delegation had pointed out last year, there was a renewed need to think seriously about striking a balance between the affordability for Member States and the needs of the Organization.  Today, that point was more valid than before.

AHMED FAROOQ (Pakistan) said he associated himself with the statement made by the representative of Jamaica on behalf of the Group of 77 and China.  He said that without adequate resources the Organization could not fulfil its mandate.  The need for Member States to pay their assessments in full and on time could not be overemphasized.  The budget reform was another reason to make sure that adequate financial resources were given to the Organization.

The Organization's financial situation remained unstable as unpaid assessments were exorbitant, he said.  He was also greatly concerned with the growing debt that the Organization owed to Member States.  That debt had a very high cost for countries like Pakistan, which provide troops for peacekeeping missions.  Pakistan was owed more than $50 million.  He had reservations about the decade-long practice of cross-borrowing, as it penalizes those countries who paid on time.  He said that the Fifth Committee discussed the Organization's financial situation every year and it should explore setting up a follow-up mechanism for the agenda item.

NONYE UDO (Nigeria) supported the position of the Group of 77 and China and reaffirmed Member States' collective responsibility to ensure that adequate resources were provided for all mandated activities.  While financial discipline was important, the needs were great.  From all indications, compared to the same juncture in 2004, more Member States -- a total number of 126 -- had demonstrated their commitment to the ideals for which the United Nations stood in a concrete way, paying their contributions to the regular budget.  It was a reaffirmation of confidence in the ideals of the Organization.  She also recognized some Member States that attached great premium to the work of the United Nations, but were undergoing severe economic hardships and could not meet their financial obligations at present.  To those, her delegation extended its support and understanding.

For peacekeeping operations, so far, payments had increased and exceeded assessments, lowering the amount outstanding as at 7 October by $400 million.  On the other hand, the amount owed Member States for troops and contingent-owned equipment, which affected many developing countries, including Nigeria, did not follow the same positive trend.  The United Nations now expected to owe $779 million by the year's end.  While taking note of the explanation for the delay in payments, she emphasized that timely payment of debt to Member States should be accorded priority.  Developing countries needed those monies.

As the end of the year drew near, she was encouraged that the cash position was stronger than at the end of 2004 for both the regular budget and the Tribunals, she said.  She also took note that, of the $345 million available in the accounts of closed peacekeeping missions, $262 million would be utilized to support active missions.  Once such payments were made, only a relatively small amount of $83 million would be available in that account.  She hoped that, in keeping with the positive trend observed thus far, the United Nations account would close with a positive balance.

United Nations Controller WARREN SACH provided an update on payments by Member States.  He said Antigua and Barbuda were added to the list of Member Countries that had paid their contribution to the regular budget in full.  He said the Czech Republic and Sudan had paid in full their peacekeeping assessments that were currently due.  Sudan and Vanuatu paid in full their contributions to the International Tribunals.

Regarding peacekeeping payments, he expressed his sympathy for cooperating countries and their concerns regarding payments due for troops and equipment.  He understood the situation and said the Organization made regular payments on a quarterly basis according to the cash available in individual peacekeeping accounts.

Concerning the regular budget, he said the fragility of the budget was well understood and the projection of ending 2005 in the black was wholly dependent on whether this year's patterns of payments replicated last year's pattern.  That assumption might be in doubt, however, since a Member State with the largest unpaid assessment in the tenth month of the year had yet to adopt a budget to fund the assessment.

Introduction of Reports

MOHSEN BEL HADJ AMOR, chairman of the international Civil Service Commission (ICSC), introduced the Commission's Report for 2005 (A/60/30), which contained its latest recommendations on the Organization's pay and benefits system, contractual arrangements and conditions of service of international staff.

He said the Commission's first area of priority since 2001 was the reform of the pay and benefits system.  He noted that the General Assembly had asked the Commission to play a lead role in the development of new approaches in the field of human resources management, as part of the overall reform taking place in the Organization.  Two significant products had already been delivered as a result of the Assembly's mandate:  the Framework for Human Resources Management and the New Master Standards for the evaluation of jobs in the professional and higher categories.

He gave an overview of the Commission's efforts on such issues as the mobility and hardship scheme; education grant and spouse benefits; contractual arrangements; hazard pay; and the entitlements of internationally recruited staff serving in non-family duty stations.

Regarding the base/floor salary scale and evolution of the margin, he noted the net remuneration margin for 2005 between the United Nations and the United States officials in comparable positions had been estimated at 111.1 on the basis of the approved methodology and existing grade equivalencies.  The Commission had not proposed an adjustment, but it was, nonetheless, the general consensus that the gap of 3.9 percentage points between the margin and the desirable midpoint of 115, should be brought to the attention of the General Assembly.

In regard to grade equivalencies and total compensation comparisons, he said the results of a periodic study of grade equivalencies between positions in the United Nations system and comparable systems in the United States federal civil service had begun.  The results should be reported to the General Assembly at its sixty-first session.

He said the Noblemaire principle had been under the spotlight for several years now.  The Commission decided that the current practice of using the highest paid national civil service combined with a reference check with international organizations was sound.

The Commission began a study to determine the highest-paid civil services, and the national civil services of Germany, Switzerland, Singapore and Belgium were identified as potentially among the best paid.  But an initial examination of total compensation in the German, Swiss and Singaporean civil services had confirmed that none of them would be an appropriate replacement for the current comparator.  So, the Commission had decided to discontinue further examinations of any of them.  A preliminary study of the Belgium civil service and selected organizations, for reference purposes only, was pending.

QASI SHAUKAT FAREED, Director of the Secretariat of the United Nations System Chief Executives Board for Coordination, introduced a note by the Secretary-General on the Senior Management Network (document A/60/209).

SHARON VAN BUERLE, Director, ad interim, of the Programme Planning and Budget Division, introduced the report of the Secretary-General on the administrative and financial implications of the decisions and recommendations of the ICSC (document A/60/421).

Acting Chairman of the ACABQ, RAJAT SAHA, introduced that body's related report (document A/60/7/Add.3).  In connection with the Advisory Committee's request for an explanation of the term "no loss-no gain", he said that additional information subsequently provided to the ACABQ had satisfied its concern.  He maintained the Advisory Committee's request that such an explanation be provided to the Fifth Committee and included, as appropriate, in all future statements by the Secretary-General on the subject.

SIMON HORNER (United Kingdom), on behalf of the European Union and associated States, said the Union attached great importance to the effective functioning of the Common System, which was the sole instrument for creating the pay and benefits package for the United Nations.  The Union also attached importance to the Noblemaire principle and acknowledged that the staff of the United Nations made up its most important asset.  He stressed the importance of the ICSC contributing to the creation of a result-oriented organization that focused on high performance, continuous learning and managerial excellence.

Turning to the ICSC annual report, he welcomed the ongoing review of pay and benefits, but was concerned that there was a difference of opinion between the ICSC and the participating organizations on how to proceed with the pilot studies.  He trusted that all participating organizations would quickly iron out their differences.  The Union welcomed the update on the Senior Management Network contained in document A/60/209.  He thought that system-wide leadership programme was an essential instrument for building managerial and leadership capacity, as well as creating a common managerial culture.

BENJAMIN A. GARCÍA (United States) said that his delegation shared the Commission's concern that United Nations organizations participating in the pilot study on broadbanding/reward-for-contribution might be deviating from the parameters set for the study.  He reminded those organizations that General Assembly resolution 59/268 stated that "no new strategy or pilot project in broadbanding or pay-for-performance should be undertaken until the General Assembly has had an opportunity to review the results of the pilot study". 

Regarding contractual arrangements, he was pleased that the ICSC had completed its review of a new framework of guidelines for determining the type and nature of contracts.  He noted that the review included the human resources network and staff representatives.  It was now up to Member States to act on that long-overdue and much-discussed simplification of the current overly complex contract system.  In that context, he noted that standard separation procedures for staff on fixed-term contracts would apply.  Consequently, he would like to know whether that was current practice.  If not, what would be the additional cost and the rationale for adopting those procedures?  He would also want to know about other additional costs involved.

Regarding the Commission's decision to approve the working group's proposals for a comprehensive review of the current mobility, hardship and non-removal scheme, he said that such an approach better addressed those related conditions of service, specifically compensating staff for hardship service and encouraging mobility.  While applauding the working group for developing the proposals, he was concerned with delaying until 1 July 2006 the implementation of the revised scheme.  He would also like to better understand the rationale for not distinguishing headquarters duty stations from others.

He noted progress on the ICSC grade equivalency review between the United Nations common system and the comparator.  Since grade equivalency was a fundamental component in measuring and comparing net salaries between the two systems, he urged the Commission to complete that as soon as possible.  Regarding the redesignation of the Senior Management Service as the Senior Management Network, he said that more important than its name was the need for the group to have clearly defined objectives. 

He also insisted that a resolution on the Report of the Panel on the Strengthening of the ICSC was long overdue.  The Committee's inaction in that regard sent a strong signal to the common system stakeholders that it could not agree on simple ways to improve a system that affected tens of thousands of civil servants and their families.  He hoped the delegations would consider the panel's recommendations from the point of view of the best long-term solution for the common system.  In that connection, he recalled that the Committee had produced a resolution on the administration of justice successfully.  That should inspire the Committee to look at similarly sensitive subjects and consider the implementation of important recommendations to strengthen the ICSC.

As for the implementation of decisions and recommendations of the ICSC, he requested that in the future that section contain more substance.  It should indicate clearly how far along organizations were in implementing those decisions and recommendations.

ROBERT WEISSEL, President, Federation of International Civil Servants' Association (FICSA), said in the midst of unprecedented and often negative media coverage of the United Nations, international civil servants had stood as bystanders, rather than active participants in the midst of developments intended to change and reform the Organization's system.  For over 50 years, FICSA had tried to ensure that the system's most precious asset -- its staff -- might work in an environment that provided fair and equitable conditions of service and upheld and respected the underlying principles of the international civil service.  Sadly, developments over the last few years had resulted in conditions of service being scrutinized, staff's abilities and dedication to service being questioned, and a clear drift away from the principles underlying a true international civil service.

He said FICSA urged Member States to keep in mind the basic principles of international civil service whenever any decisions that impacted on staff conditions and service were considered in the context of reform measures.  As the Association had expressed great concern regarding staff security issues last year, in the shadow of the 2003 tragedy in Baghdad, it welcomed the creation of the new Department of Safety and Security.  However, some goals remained unfulfilled, including the assurance of an agreed and enforceable accountability framework to the Secretary-General, and central and regular funding for the Organization's security management system.  For years, FICSA had advocated hazard pay to be paid to United Nations Relief and Works Agency for Palestine Refugees in the Near East (UNRWA) staff, as they were subject to daily heightened security concerns.

Turning to the report of the ICSC, he said the revision of the mobility and hardship scheme in light of the decision taken to de-link the existing scheme from the base/floor salary scale represented the best compromise reached under the circumstances.  From progress reports from the volunteer organizations participating in the pilot study for broadbanding and pay-for-performance, FICSA had learned that the study in some organizations did not adhere strictly to criteria for the pilot study that had been decided upon by the Commission.  FICSA also had concerns about the present review of the pay and benefits system and the suitability of concepts such as pay-for-performance and broadbanding.

Taking note of the Commission's recommendation for an increase of 2.49 per cent to the base/floor salary scale on a "no loss-no gain" basis with effect from 1 January 2006 for Professional and higher categories staff, and taking note of the 2005 margin forecast and its close proximity to the 110 level, he said that, in light of repeated Assembly resolutions to maintain the margin at 115 over a period of time, FICSA was extremely distressed by the lack of a clear recommendation for a return to the 115 margin level.  Although FICSA had stated before that the ICSC had taken the right step in addressing contractual arrangements with a view to simplifying them, the Association urged Member States to ensure that the opportunity to make a career in the United Nations system was upheld by rejecting the inclusion of contracts that did not safeguard that possibility.

As for the report of the Panel on Strengthening of the International Civil Service, he urged that the report's first eight recommendations be considered in depth with a view to their adoption.  The remaining recommendations did not adhere to the terms of reference intended in resolution A/57/612.

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